Polar,

You seem to know what your talking about and I am not trying to argue with you or anyone else here. The first thing i do is ask a guy how long they have worked at said dealer. Less than a year...I move to the next guy. Someone who has been there awhile tends to give you the respect we all deserve. I dont need a "new guy: trying to make a big deal for himself. I am willing to pay a profit but not get taken. As I am sure most of you feel. Just be prepared before you go in.

As for selling cars at a loss...it does happen and for most of the country BIG TRUCKS are not in demand. Why do you think there is $11k off. Dealers do pay a floorplan and thus pay interest on the cars on the lot. That is part of what the hold back is for. As for X-plan, it is basicly invoice and the dealer gets paid a percentage of the MSRP and salesmen usually get a flat fee from the dealer.

X-plan is the easiest way to buy a Ford, unless you have A-Plan. Gets rid of all the games.

Some great deals to be had out there right now.

 

As for selling cars at a loss...it does happen and for most of the country BIG TRUCKS are not in demand. Why do you think there is $11k off. Dealers do pay a floorplan and thus pay interest on the cars on the lot. That is part of what the hold back is for. As for X-plan, it is basicly invoice and the dealer gets paid a percentage of the MSRP and salesmen usually get a flat fee from the dealer.

Ford sold a little over 76,000 F-Series pickups in August, Chevy peddled about 52,000 silverados. Add in roughly 30,000 Sierras and you have well over 100,000 full size truck sales- in one month. That's down about 10% over last year, but still a sobering number. Moral of the story, the big truck market is anything but dead.

As for the $11K off- I see the adds too. But- that's forgoing the 0% financing, and damned sure the dealer's going to make it up in financing and trade-ins. Unfortunately, that's just how this biz works. And fer chrissakes read those leader adds carefully- the fine print can be an eye-opener sometimes.

re: selling at a loss and floorplanning. I've already, but to lose a few grand on a car deal to save a few hundred on floorplanning expense makes no sense. While customer A may not pay what you need, someone down the road always will- and there's little or no risk in waiting it out.

A quick story- we have a Freestyle demo that flat would not go away. Can't really say why, but it didn't. After six months of sitting, and passing a few $3-$5K losing offers, we finally just put plates on it and gave it to the Parts Manager as his long-term demo (think write-off here). We'll write it down for the next 18 months and put it on the used car lot for a realistic used figure. Current loss never realized, Uncle Sam will participate in the depreciation.

 

One of the worst mistakes anyone can make buying a new vehicle is to buy it based upon the monthly payment. As I stated earlier, do your homework and find out what invoice is and subtract rebates and incentives. I add $200 to that amount and that is what I pay. A bit of homework I didn't mention is to line up your financing before you visit the dealer. Go to your bank or credit union and get prequalified for the loan. They will tell you how much your payment would be based upon purchase price, down payment, interest rate and length of contract. I have a financial calculator and after a little reading have learned how to calculate payments based upon these terms. I understand that many are somewhat math challenged and don't want to take this step. If you are in that group, you need to be prequalified before you set foot in the dealership as you will know what your payment would be. That way when you get into the small sweaty room with the finanace person you hold all the cards. Tell them what your preapproved interest rate and term is, and ask them if they can beat it. Sometimes they can, but my credit union is very competitive.


With regard to the $11,000 off MSRP stuff that is mentioned often here, be very careful. If you read the fine print to get the $11,000 off you need to set the vehicle up for handicap hand controls, be a member of the military, a recent graduate, have a Ford vehicle to trade-in, and even some I have read require you use the vehicle as a farm vehicle. If you don't qualify for all of these rebates, you can subtract thousands from that $11,000.

Trade-ins are a whole 'nother story. You are best to sell your trade yourself. If you are going to trade-in, the most you can expect is what the Kelly Blue Book says trade-in value is. I also have yet to find a dealer who will buy a trade at the "excellent" price and many of my trades met all the requirements listed by KBB.com for excellent. Here's a little trick I have used in the past. A few days prior to making the visit to the dealership. I'll take my trade to the used car lot at the dealer and ask what they would give me for it wholesale. Of course, the trade must be one that they would want to buy. You can then use that price as your bottom dollar to accept for your trade. Again you hold all the cards. You just have to realize that not all of them are aces. If you follow the advice above, you can be assured you got the best deal on the purchase and you are not leaving the dealer room to pay more for your trade than it is worth. If you owe more than your trade is worth don't expect the dealer to pull a rabbit out of the hat. That money to pay off your old vehicle has to come from somewhere.

Realistically I agree with Polarbear. No dealer is going to take a loss on a new vehicle. Knowing what a new vehicle's invoice is, and what rebates/incentives are offered, and what your trade-in is worth are the only ways you can be sure you got the best price on your new vehicle. A little ground work can make you confident that you have made the best deal possible.

 

Is this completely true? I've bought 2 A-plan vehicles and still felt as if I was being toyed with, either trade in or APR%, etc.

Polar, how is this question answered from the dealer standpoint and from the consumer view?

 

1 They have a lot of liability that comes with owning a dealership shop for insurance and see what it costs.

2 The only way the Sales Staff make money is when a vehicle is sold. None sold none made

3 There are thousands of dollars spent on support staff to just run the day to day operation of the dealer. Office staff, lot porters, detail guys ect.. Those people must be paid regardless if a vehicle has sold or not.

4 Advertising, call your local newspaper and find out what a full page ad runs!


Now think about this when you go to the grocery store and buy a Can of soup for $1.89 that the store owner paid $.42 for, do you think that is too much profit to pay.

Buy a TV at <ST1lace Circut City for $4200 that they paid $2900 for, do you think that is too much profit to pay.

It all comes down to investment. If I invested $44,000 hard cash for this F-250 and I used a simple mark up of 30% that means the truck would sell for $57,200, sounds like a lot to pay for it because we are using adult numbers of thousands not kitty numbers of dollars. Most car deals average $1800-$3600 per car deal. Now let’s break down that number, most sales men earn 17-35% commission of the gross profit some stores have a salesmen and a closer. The people who run the sales dept earn a percentage also so let’s say that after paying commissions out there is 45% of the profit let. Now let’s pay light bills, advertisement bills, insurance ECT… at the end of the day the Owner puts $200 -$800 profit In his pocket if there lucky, doesn’t sound like a lot at the end of the day when you have Millions of dollars at stake. Because of the internet and other sources the customer has the ability to find out more about the pricing then ever before. So if a dealer gave you his “Best Price” right off the bat there would not be a dealership around long. It is a business and it needs money to survive and the person that put his name on the door deserves the right to make money that is why they opened it. No red cross signs there. So instead of winning about dollars be that guy who does his home work and learn how to negotiate like a real person not a I will hold out until they break. There are plenty of dealers out there and some are ethical and some are not, referrals are the best, your buddy bought one here and had a great experience or a bad experience, use those guild lines and you will have a better chance of making the best possible deal out there for you. Now trade ins everyone always wants to bitch about that. Customers are the biggest liars when it comes to there trade in. Do you think we tell them about the tranny slipping or the after I drive for 20 minutes the engine starts to ping ands rattle, brakes are needed? Hell no we say how great it is and nothing is wrong with it…. Well think about this why would a legitimate dealer buy a used car/truck run it through his shop and put it out on the front line knowing it has major problem, they don’t they will wholesale it off. That is nothing but a nightmare in the making. What happens is the Customer complains bad referrals, and most likely will end up bringing the car back and having it fixxed or returning it. Can the dealership go back to you say hey this car is slipping I need you to fix the transmission? NO

My point of this post is to let us all think, be a man or women and learn how to get what you want with out thinking someone is getting over on you. More than likely most of you are buying something you really can’t afford or need and price 97% time means nothing monthly payment is what matters. Do your home work!! And please don’t reply to this with posts that say this dealer did this and this dealer did that, not every dealer is legitimate and not every number and % I used is dead nuts its more to prove a point that we don’t bitch about paying more to the government for taxes on a new car purchase then we pay the Dealer in profit, remember the salesperson at the dealership probably makes a ok living but only 10% of them really do the rest fake it and make less then $30,000 a year

 

Some of the words and coments on my last post got distored sorry, dont know how or why but i beleive it has something to with the quick link ads. Hope you all can read it.

 

A-Plan? Simple- dealer would rather not do one, if given the choice.

 

Care to explain?

 

Shur- not enough profit in that deal. Same issue with employee pricing last year- you have no idea how many dealerships went up for sale after that program was over. Simple math- it takes a 8% gross margin to net 2% profit. A-Plan grosses about 3 1/2%.

 

XXduty does make some good points but I don't buy the end premise. The problem is that most dealerships are still operating under the idea that they hold all the cards and they will grind you, taking hours of your time, to get every last buck they can out of you. Other than the car industry, who does business that way? The real world is that with the internet, the rules are changing and those dealerships that don't adapt will suffer and eventually fail acknowledging the imbedded costs of running a car dealership. What is not mentioned is that there are many other ways for a dealership to make profit and a large part of that comes from the used car department, financing, extended warranties, and the shop. The dealer also gets money for overhead from the dealer holdback from the manufacturer. No one argues about the profit for a grocer for a can of soup because if they don't like that grocer's price, they go to a different store that carries the very same soup for less money. It is easy to comparison shop for soup or televisions but not so for a new vehicle as almost every dealer hides the true price of their vehicle until you are sitting in the small sweaty room with the finance person. It has been stated in this thread many times that the dealer will not sell for a loss. That makes sense. If my $200 over invoice less rebates and incentives is not a good deal for them, why do they accept it? Wouldn't they just hold out until an uninformed buyer comes along?

Until the industry (and I agree with polarbear that much of this is manufacturer driven) wakes up and comes up with a new business model, they will have to deal with informed buyers and waste much of their time and the customer's time getting to what is a fair market price for the new vehicle. To me it just makes sense that as soon as you determine that you are dealing with an informed buyer, why drive up your costs by wasting more time ascertaining what you already know? Cut the deal and go get the next one. I have met a few sales professionals when buying new vehicles but unfortunately most make me want to go home and shower after spending time with them. What happened to respect and honesty? You get what you give I guess.

With respect to used vehicles, I agree that many people try to take advantage of the dealer by trading in a bad vehicle. I think most dealers are aware of this and that is why trade-in value is so low. If you don't want the hassle of selling the vehicle yourself, then be prepared to take a financial bath when you have someone else do it for you. If they don't inspect the vehicle (they are in that business) before they take a trade, then that is their loss and the price any bad business person has to pay for their lack of diligence. I do not condone selling your car to anyone without disclosing any existing or looming problems however.

There is a dealership near me that sells Ford cars & trucks on a no dicker sticker. They post the price of the car on the windshield and that is what you pay. They have been doing this for the last 12 years that I know of. They are doing very well and I have found their pricing on most models to be at or below my $200 over invoice. They still play games with financing and trade-ins but I think they are making the step in the right direction. It is there that I have found what I would call "sales professionals". I have bought 2 vehicles from them.

I hate goimg down this rabbit hole but I was one of those who paid way too much for a new vehicle when I was younger and stupid. Keeping someone else from making the same mistakes I made is my way of rectifying those past mistakes. I have many friends who have asked me to help them negotiate a better price on their new cars and I go willingly because, in a perverse way, I kinda enjoy it. Don't fear knowledge It is the key to empowerment.

 

As long as there are trade-ins with balances and folks financing new cars, the payments will still be the primary concern of most new car/truck buyers. A $200 over invoice deal doesn't do the consumer any favors when he's $10,000 upside down in the trade, and the deal needs to be structured in a form that makes sense to, and conforms to guidelines of a lender.

That what we forget here- most FTE deals are pretty cut-and-dried purchases- but that's not the retail car biz. as long as peo0ple finance these things to the max, I don't see a lot changing either- not in the mainstream.

 

Polarbear,


Again, I find myself agreeing with you. Anyone who is upside down on their trade, expects a dealer to make cash appear out of nowhere to pay it off and get the bottom line price on their new vehicle, is dreaming. The point of my posts are to do the homework. You need to be realistic in what your trade is worth. You need to be realistic on what a dealer will accept for the new vehicle. You need to understand which rebates apply. If you have bad credit, you are at their mercy. I am not remotely trying to claim everyone understands this. Dealerships are not the lone cause in this consumer model that has developed. The only thing that will change it will be if the public becomes more informed about how to buy a new vehicle. That also means the consumer has to be reasonable in their expectations. If they have little knowledge, they cannot be reasonable.

Payments are a reality but don't ever go to a dealership and buy a new car based upon what the monthly payments would be. As I stated earlier, go to your bank or credit union, get preapproved for a set dollar amount (they will tell you what the payment would be) and use that knowledge towards what you would pay for your new vehicle. Almost without exception, I can guarantee that if you walk into a dealership and tell them you want a monthly payment of $X I will walk out of that same dealership, using what I have discussed here, with more vehicle or a lower payment on the same vehicle, than someone who only buys based only upon what their payment would be. Payments are based upon amount, term and interest. If you don't know what all 3 of these are, you are going to spend more than you should.

 

I agree with you here polarbear! That is why I am SO against the 0% for 72mths. If anyone wants to throw money away...then that is the way to do it. Especially with American (FORD) vehicles...that DO NOT hold value!

Just my .02

biz

_______________________________
2003 F250 SD SC 142" XLT FX4 V10 Auto 4x4 3.73s

 

"I agree with you here polarbear! That is why I am SO against the 0% for 72mths. If anyone wants to throw money away...then that is the way to do it. Especially

with American (FORD) vehicles...that DO NOT hold value!"

That 72 month 0% deal would be OK if you put down a hefty amount and there is no pre-payment penalty. BUT if there is a rebate incentive that would be the way to go and either pay cash or get financing through a credit union or your bank. Give the dealer a opportunity to meet or beat that deal.

 

I don't think the problem is resale per se- it's how much gets financed on the unit. $10-$20K negative equity isn't that unusual anymore. Not on $50K trucks that can be financed 110% for extended terms. Neither are banks that'll pick that up if it's the right customer and the right deal. Problem, of course, is what hits the fan in two years when you still owe $50K on a two yr old Suburban and something new catches your eye. Or, worse, you got downsized and that $1100/mo car payment is really starting to take a chunk out of the food budget.

Let's look at it another way. Back in the dark ages, I'm told we could trade a customer out of a year old Impala into a new one for about $1000 difference. At that figure, it was a good deal for the Company and a good deal for the customer. But- that was on cars that cost $3500 brand new. To accomplish the same thing in todays dollars, you'd be talking---- what, $10,000 difference? The percentages really haven't changed- just the dollar amounts.